Adani deal: Treasury CS Mbadi to appear before Senate

Treasury Cabinet Secretary John Mbadi will appear before the Senate Monday after Kisii Senator Richard Onyonka sought a statement on plans to lease Jomo Kenyatta International Airport (JKIA) to a private company.

Mbadi will appear before Senate Roads and Transport Committee barely a week after his Roads and Transport counterpart Davies Chirchir had a difficult time convincing Kenyans that the government had not yet entered into a deal with Indian company Adani Airport Holdings Limited.

Onyonka had sought confirmation on whether Kenya Airports Authority (KAA) had signed an agreement with Adani to lease JKIA under the Build Operate Transfêr Model of Public Private Partnership. The Kisii Senator wanted terms of the agreement and associated costs to be incurred by airlines and other users of JKIA, made public.

Chirchir told the Senate that there is no Concession Agreement existing between KAA and Adani Airport Holdings Limited pursuant to the latter's PIP application of March 1, 2024 currently undergoing stakeholder engagement, due diligence and drafting of the concession agreement.

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The Senate Committee was chaired by Kiambu Senator Karungo Thangwa.

“The Adani Airport Holdings Limited of India submitted a PIP to "Build, Operate and Transfer" JKIA under Public-Private Partnership (PPP) model with the Government pursuing PPP model on account of fiscal constraints in the face of acute infrastructure constraints,” Chirchir told the committee.

The Kisii Senator asked the CS to clarify whether public participation was carried out and if not, at what stage it would be undertaken.

Chirchir said that within the Act, public participation happens after the feasibility stage.

The Roads CS revealed that they have commenced public participation including engagement with KAA senior management, section heads, 500 staff, airline operators under their umbrella -Kenya Association of Airline Operators, ground handlers, retailers and concessionaires, Kenya Civil Aviation Authority (KCAA), and Kenya Airways.

He said that already the matter is before the court, and the government will avail all the relevant information, including to all other stakeholders to ensure clarity on the propose JKIA-Adani deal.

“I wish to remind us of the great benefits that this proposed model is expected to bring to the nation, which is among others; a modernised facility to balance capacity leading to operational excellence and regional competitiveness as an aviation hub; improved service quality trade and associated trade activities while maintaining Kenya as a premium anchor state in the region,” said Chirchir.

Onyonka asked the Roads CS to provide the contract documents of the agreement and indicate the ownership of Adani Commercial Limited, the processes undertaken to identify and award the lease and state whether there was public participation in the process.

In response Chirchir said the government had not reached contracting stage and they only have the Heads of Terms document summarising key negotiations items awaiting the finalisation of the stakeholder engagement and due diligence to inform the drafting of the concession agreement.

The Kisii Senator asked the CS to explain the process that was followed in arriving at the decision to award the Privately Initiated Proposal to Adani Commercial Limited;
“Kenya Airports Authority has not awarded any contract to Adani, however, a PIP is an unsolicited proposal, any private party can submit a PIP to a contracting authority like KAA at any time. Once a PIP is received, it is taken through due process,” said Chirchir.

The CS explained that this includes initial due diligence, evaluation, assessment of the evaluation report by the PPP directorate, approval by the PPP Committee, preparation of bankable feasibility reports, determination by the PPP Committee of suitability for PPP and guidance on the procurement method, consideration by the PPP committee of the project and financial risk matrix, approval to proceed to negotiations.

He revealed that they have received approval of the PPP Committee to proceed to negotiations subject to stakeholder engagement and due diligence, If the negotiations are concluded successfully, we will submit it to the board for approval, it will then be submitted to the A G for clearance and finally to cabinet.

Chirchir told the Senate that the Medium Term Investment plan, on the other hand, assessed the high level technical, economic and financial evaluation of each of main six airports covering JKIA, Moi, Eldoret, Wilson and Kisumu airpots with detailed feasibility study further done on JKIA by ALG of Spain under KAA sponsorship to guide investment decisions.

He said that the sector infrastructure deficit was an output of the National Aviation Policy Study and Medium -Term Investment Plan of December 2022 done by ALG of Spain under the client ship of the PPP Directorate, the Policy guides for sustainable development of the civil aviation sector with respect to aviation planning and development, security, safety, environment, technology, human resources development and data and information management.